Xylem Inc. (XYL), headquartered in Washington, District of Columbia, designs, manufactures, and services engineered products and solutions. With a market cap of $32.3 billion, the company's products include water and wastewater pumps, treatment and testing equipment, industrial pumps, valves, heat exchangers, and dispensing equipment.

Companies worth $10 billion or more are generally described as “large-cap stocks,” and Xylem perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the specialty industrial machinery industry.

Xylem cements its leadership in water technology, driven by its sterling brand reputation and customer trust. As a benchmark for quality and reliability, Xylem retains a loyal customer base and attracts new business. The strategic acquisition of Evoqua bolsters its market dominance, expanding offerings and strengthening its competitive advantage.

Despite its notable strength, XYL slipped 9% from its 52-week high of $146.08, achieved on May 21. Over the past three months, XYL stock has declined 5.4%, underperforming the S&P 500 Index’s ($SPX) 2.4% gains during the same time frame.

In the longer term, shares of Xylem rose 16.2% on a YTD basis, underperforming SPX’s YTD gains of 17.8%. However, XYL shares climbed 39.2% over the past 52 weeks, outperforming SPX’s 26.2% returns over the same time frame.

To confirm the bullish trend, XYL has been trading above its 200-day moving average since November 2023. However, it is trading below its 50-day moving average since early September indicating a recent bearish trend.

Xylem's strong price performance can be attributed to high demand in its measurement & control solutions segment, substantial growth in water infrastructure and water solutions, and the strategic acquisition of Evoqua, which further expanded its water treatment capabilities and revenue.

On Jul. 30, XYL shares closed down more than 5% after reporting its Q2 earnings results. Its adjusted EPS of $1.09 beat Wall Street expectations of $1.06. The company’s revenue amounted to $2.17 billion, topping forecasts of $2.16 billion. XYL expects full-year adjusted EPS to be between $4.18 and $4.28.

In the competitive arena of specialty industrial machinery, Parker-Hannifin Corporation (PH) has taken the lead over XYL, showing resilience with a 32.2% uptick on a YTD basis and solid 53.9% gains over the past 52 weeks.

Wall Street analysts are moderately bullish on XYL’s prospects. The stock has a consensus “Moderate Buy” rating from the 18 analysts covering it, and the mean price target of $153.80 suggests a potential upside of 15.8% from current price levels.

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